Here's to the end of a nasty bubble

I'll be honest: I love stories about falling house prices. Yes, there is the wretched prospect of repossession for some. Yes, there are years of negative equity ahead for the many.

But who in their right mind thinks that a two-bed new-build flat for £200,000 is a good thing but when it falls to £100,000 it's a bad thing? I'll tell you who: greedy property developers and the short-sighted banks that lent to them. Plus the foolish people who thought that buy-to-let was a one-way ticket to easy money.

House prices are no longer at absurd levels - but they still have some way to go before they reach sanity.

The government let the housing bubble develop because economists draw a false distinction between goods inflation (bad) and asset inflation (leave it to the market). So the Bank of England raises interest rates when food prices rise, but not when a property bubble develops. The same rightwing economists believe government has no role in regulating the supply of credit.

The property market will recover. And when it does, regulators must not fear using interest rates and credit restrictions to rein it back. If we are very, very lucky, we will never see real house prices back at 2007's level again.

And so to the latest cynical move by the power firms.

This week Guardian Money was contacted by two gas and electricity customers complaining that their power supplier has imposed retrospective price increases.

Mrs Preston of Leatherhead contacted us after Scottish Power wrote to her saying her gas bill was going up by just under 20%. The letter arrived on the same day its executives told the Guardian that prices would be coming down. To add insult to injury, it said the increase would be backdated to October 1. British Gas did a similar thing this week. On September 30 it told the press it was increasing its Click 5 tariff by 45% for gas, but it only got round to emailing customers this week. Is this the companies being forgetful, or is something else at play?

In any other industry a company increasing prices by 45% would be required to notify customers immediately - but not, apparently, the power industry. According to the regulator, Ofgem, its rules allow power firms to tell customers of a price increase up to 65 days after it comes into force.

Why do the companies wait so long?

The reason, I suspect is to stop customers switching to a cheaper supplier without paying the higher rate.

Customers faced with a retrospective increase have just 10 working days to decide if they wish to remain with a supplier, or switch to a new supplier. Miss that deadline, and you're on the higher tariff. If you switch to a new supplier, it has 15 working days after you have told the old supplier that you are leaving to give notice to your old supplier it is taking the supply over. Only if both happen can you avoid the increase.

It's crazy, but true. And while we are on the subject, how did we get to the stage where it is almost impossible to know what you are being charged? I tried to find out what I was paying per kilowatt-hour this week, and was forced to give up. Small wonder that 45% of households have never switched supplier - few have any idea what they are being charged.

To my eyes, the rules that govern the cynical power firms need a radical overhaul. Ofgem, quite simply, is no longer fit for purpose. The way it appears to have cosied up to the industry it is supposed to regulate in consumers' best interests, is nothing short of a scandal.